Essential Treasurer Series 2020

Essential Treasurer Series 2020

The Finance and Treasury Association together with EY, will again present the Essential Treasurer Series for 2020.

The Essential Treasurer Series is the FTA’s annual session to update its members and other interested parties in what is important and topical right now. 

The Essential Treasurer Series will take place in Sydney, Brisbane, Perth, and Melbourne and with speakers from Greensill, Bloomberg, and EY discussing:

  • Key market information
  • Technology – automation, TMS implementation, NPP/Payments
  • Benchmark rates – practical to do’s, regulation, options
  • Preparing for a zero interest rate environment
  • Innovative alternative funding solutions

Register now to ensure your place – networking drinks will follow the program.

Dates and Locations:

The Series will be hosted at EY in each respective city.

Sydney – Tuesday 3rd March 2020

Brisbane – Tuesday 10th March 2020

Perth – Thursday 12th March 2020

Melbourne – Monday 16th March 2020

Time:

Essential Treasurer Series: 2:00pm – 6:00pm (local time)

Networking Drinks: 6:00pm – 7:30pm (local time)

Cost:

FTA Members have access for free to the Essential Treasurer Series.

Non-Members can access the Series for a fee of $50 (inc GST).

Full-Time Students interested in Treasury can access the Series for a fee of $20 (inc GST)

Reserve Bank of Australia – Uncharted territory for unattainable goals

Reserve Bank of Australia – Uncharted territory for unattainable goals

3 October 2019

 

 

Aidan Shevlin, CFA
Head of Asia Pacific Liquidity Fund Management
J.P. Morgan Asset Management

 

 

At the beginning of October, the Reserve Bank of Australia (RBA) cut its overnight cash rate by 25bps to a new record low (Exhibit 1a).  The third rate cut in five months has effectively halved the central bank’s key policy rate – leaving the RBA in uncharted territory and one step closer to unconventional monetary policy to achieve potentially unattainable employment and inflation goals.  The current trajectory of cash rates will have significant and far-reaching implications for local currency cash investors.

Optimistic rate cuts

In recent speeches, RBA governor Philip Lowe struck an upbeat tone, noting the economy had reached a “gentle turning point”1 helped by a combination of low interest rates, tax cuts, lower currency, infrastructure spending and housing market stabilization.

Despite this professed optimism, the RBA still cut rates in October and remained dovish, committed to “ease monetary further if need to support sustainable growth in the economy, full employment and the achievement of the inflation target”2. However, given current lack of macroeconomic drivers to achieve the central banks full inflation of 4.5% was last reached in 2008 and core inflation target of ≥2% (Exhibit 1b), the probability of attaining either goal remains remote.

The reality is more nuanced: While Australia is currently in its 28th year of economic expansion, gross domestic product (GDP) growth has slowed to a decade low; moreover the rising participation rate is offsetting almost 2-years of positive jobs creation and despite the recent recovery, housing prices have fallen below their long-term trend.  Meanwhile, the long term slowdown and rebalancing of the Chinese economy will eventually weigh on exports – although short-term Chinese infrastructure stimulus will benefit Australia’s commodity driven economy.

Sluggish consumption and structural trends

Apart from weak global growth, the RBA’s other key domestic concern remains the lack of growth in domestic consumption – especially during a period of rising employment.  However, this can partly be explained by job insecurity, muted wage growth and the high level of consumer indebtedness (Exhibit 2a).  All these factors should still benefit from lower interest rates – suggesting that monetary policy remains an effective policy tool – provided commercial banks pass the rate reductions on to consumers.

Interestingly, for the first time, the RBA alluded to a new rationale for the latest rate cut.  The structural shifts in global interest rates (Exhibit 2b) – which have fallen to record lows have also placed downward pressure on Australian interest rates.  The central bank fears if it ignored the actions of major central banks, the “exchange rate would appreciate, which in the current environment would be unhelpful on terms of achieving both the inflation target and full employment”3

The implications of sustain lower interest rates

The recent rate cuts, fiscal stimulus and continued Chinese commodities demand, suggest the modest Australian economic recovery is likely to endure.  However, growing expectations of additional monetary policy easing by major central banks may force additional, unnecessary RBA rate cuts and even trigger unconventional monetary policy to restrain unwanted capital inflows and AUD appreciation.

For Australian cash investors who are more familiar with high interest rates, steep yield curves and competitive deposit rates, the prospect of extremely low or even zero yields represents a significant challenge.  These difficulties have been compounded by the Royal Commissions impact on commercial banks demand for deposits and the Australian Prudential Regulatory Authority’s (APRA) clarification on the definition of cash.

Nevertheless there are several techniques developed and refined during the past decade of zero US interest rates which should help Australian corporate treasurers mitigate some of these complications.  These include diversifying beyond deposits into money market funds and ultra-short duration funds,   segmenting cash by liquidity requirements and identifying sectors and tenors that offer additional return for minimal reductions in liquidity and security. 

Although combining these three techniques will not fully offset the negative impact of RBA rate cuts on cash returns, they will allow treasurers to achieve a competitive return consistent with the objectives of capital preservation and maintaining a high degree of liquidity.

To read more our liquidity insights, visit www.jpmgloballiquidity.com

 1 An Economic Update by Philip Lowe; as of September 24, 2019

2 Statement by Philip Lowe, Governor: Monetary Policy Decision; as of October 1, 2019

3 An Economic Update by Philip Lowe; as of September  24, 2019

Exchange April 2019

The April Exchange Newsletter is out now! The newsletter covers upcoming CPD events including the Treasury Management Course and Fundamentals, and more!

Exchange March 2019

The March Exchange Newsletter is out now! The newsletter covers upcoming CPD events including Essential Treasurer and Fundamentals, and a blog post from our WA Chapter Chair sharing tips for the modern treasurer.

Exchange February 2019

The February Exchange Newsletter is out now! The newsletter covers International Women’s Day events, liquidity insights from JP Morgan Asset Management, funding opportunities for women in finance and more.

Considering an IPO to fuel your company’s future?

Considering an IPO to fuel your company’s future?


The landscape for initial public offerings (IPOs) continues to evolve as legislation changes and market volatility and policy issues affect IPO activity. This report by PwC looks at the trends to help you be as prepared as possible when stepping into the public arena. In this updated version of PwC’s Costs of an IPO publication, it focusses on a full range of costs associated with an IPO. While these costs can vary based on complexity of the structure, size of the company, and dollar value of the offering, there are many costs that apply across the board.

Insight into the costs of an IPO can help a company outline an IPO to the board of directors, its employees and other stakeholders. Having a realistic expectation of the costs can help improve the budgeting process, limit surprises, and reflect a well-structured IPO timeline.

This publication can help you understand the typical costs of going and being public for companies within a range of proceeds raised in the IPO, as well as for a range of the last 12 months revenues.

Where CFOs say Treasurers need to be more strategic

Where CFOs say Treasurers need to be more strategic 

CFOs are facing a number of difficult challenges in today’s increasingly interconnected global economy. CFO Publishing, an Argyle company, asked more than 150+ senior finance leaders in a comprehensive new survey their greatest needs from their treasurers in a comprehensive new survey. 

There were three main areas of need being risk, cash and working capital management.